[LOGO] FEDERATED INVESTORS
World Utility
Fund
Semi-Annual Report
May 31, 1995
Established 1994
EQUITY
President's Message
Dear Fellow Shareholder:
World Utility Fund was established in April 1994, and I am pleased to present
the Semi-Annual Report to shareholders for the period from December 1, 1994 to
May 31, 1995. The report includes an interview with the fund's portfolio
manager, Christopher H. Wiles, Vice President of Federated Management. The
interview is followed by a listing of the fund's portfolio of utility stocks
(domestic and foreign) and other investments (convertible bonds and
convertible preferreds), and its financial statements.
During the past six-months, the fund paid Class A and Fortress shareholders
$0.20 and $0.19 in dividends per share, respectively. The net asset value per
share of Class A Shares and Fortress Shares increased from $9.62 and $9.61 on
December 1, 1994 to $10.34 and $10.32 on May 31, 1995, respectively. The fund's
total net assets were $11.5 million as of May 31, 1995.
The World Utility Fund is designed to provide a total investment return by
selecting both domestic and foreign companies in the utilities industries. The
fund has maintained a diversified portfolio_33.33% electrics, 14.17% natural
gas, 24.21% telecommunications, 2.12% water and 25.72% non-utilities
(percentages based on net assets as of May 31, 1995). These investments were
evenly weighted between domestic and international issues. Our diversified
portfolio helped World Utility Fund perform respectably against its peers in
domestic utility stocks and avoid the volatility of many international markets.
For investors who want to have international exposure, the World Utility Fund,
which emphasizes utility companies from around the world, offers ownership of
vital service companies with expanding futures.
The fund's shares can be purchased regularly as an international investment
plan with dividends reinvested to compound shares for future income. I
recommend adding to your account on a regular basis.
Thank you for your participation in the fund. As always, your comments and
suggestions are welcome.
Very sincerely yours,
Richard B. Fisher
President
July 14, 1995
Investment Review
[INSERT PHOTO HERE]
Christopher Wiles
Vice President,
Federated Management
Q Will you give us an overview of the international utilities
market?
A In local currency terms, results have varied considerably. In Europe, the
Belgian, German, French and Spanish markets have performed well, generally
aided by the strong bond performance of the "core" European countries. Italian
utilities have been a notable laggard in Europe. Political factors have
hampered the performance of these stocks.
Most Asian utilities are doing well in 1995, due to a return of foreign money
to these markets after a weak 1994. Japanese utilities have done badly in local
currency terms and on an absolute basis, were down an average of 6.3%. However,
this is strong on a relative basis as the Nikkei Index* is down 25% for the
year to date.
Latin America remains weak, with most utilities off between 10-20%. Chile has
fared better, with most off less than 5%.
The weak performance of the dollar has been a general positive to U.S.
dollar-based investors in 1995.
Q How did World Utility Fund perform amid this activity?
A The World Utility Fund has performed well in this environment. Through May
31, 1995, the fund was up 10.46%. The Global Utility Index*, a representative
index of global utilities compiled by the London Financial Times, advanced
8.86% in the same five months.
Q Will you reiterate the fund's long-term investment philosophy?
A The fund's long-term goal is to provide investors a total investment return
through income-producing global equity exposure. To achieve this goal, we will
maintain somewhat balanced exposure among three regions: Asia, Other Americas
and Europe and maintain a more concentrated exposure in the United States. Our
investment philosophy emphasizes buying undervalued utilities in countries
where improving political and economic conditions offer potential for capital
and currency appreciation. Also, we seek to enhance income and lower interest
rate risk by using convertible securities, both foreign and domestic.
* These indices are unmanaged.
Q What are your near-term plans for the fund?
A We have generally completed our rounding out of the portfolio's global
structure. Currently, we are seeking to move out of markets that have advanced
rapidly this year if valuations seemed to have extended themselves. Hong Kong
is one particular example on which we are focusing. We will then seek to adjust
weightings where markets are undervalued and the potential for a positive
valuation correction is approaching. Spain has potential in this regard. So,
our near-term strategy is really one of regional weighting adjustments.
Q What potential advantages are there in pursuing long-term financial goals
through a global utility investment such as World Utility Fund?
A Our studies have shown that in the years from 1990 to 1994, global utilities
as an asset class have outperformed the Morgan Stanley Capital International
Europe Australia Far East Index*, on a total return basis, by a ratio of 2.9 to
1. Additionally, the risk, as measured by yearly standard deviation, is over
25% less.** Through global utility investing, one receives exposure to foreign
economies, portfolio diversification, and better income potential than most
international funds. Combining these characteristics with the historical
risk/return profile makes global utility investment an extremely compelling
investment opportunity.
* This index is unmanaged.
**Performance quoted represents past performance. Investment return and
principal value will fluctuate so that an investor's shares, when redeemed,
may be worth more or less than their original cost.
World Utility Fund_
Portfolio Update
[INSERT GRAPH HERE]
World Utility Fund_
Portfolio Update (continued)
[INSERT GRAPH HERE]
[LOGO] FEDERATED SECURITIES CORP.
-------------------------------------------------------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 981487101
Cusip 981487200
G00259-05 (7/95)
World Utility Fund
Portfolio of Investments
- --------------------------------------------------------------------------------
May 31, 1995 (unaudited)
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--77.6%
- --------------------------------------------------------------------------------------------------
UTILITY--68.4%
-----------------------------------------------------------------------------------
5,000 AT&T Corp. $ 253,750
-----------------------------------------------------------------------------------
70,000 Australian Gas Light Co. 216,189
-----------------------------------------------------------------------------------
4,000 BellSouth Telecommunications, Inc. 245,500
-----------------------------------------------------------------------------------
2,500 British Telecommunications PLC, ADR 157,813
-----------------------------------------------------------------------------------
46,000 Central Costanera S.A. 133,400
-----------------------------------------------------------------------------------
22,500 China Light and Power 123,040
-----------------------------------------------------------------------------------
25,000 China Light and Power, ADR 136,715
-----------------------------------------------------------------------------------
7,000 Cinergy Corp. 186,375
-----------------------------------------------------------------------------------
9,000 Compania Boliviana de Energia Electrica 235,125
-----------------------------------------------------------------------------------
10,000 DPL, Inc. 220,000
-----------------------------------------------------------------------------------
9,000 DQE, Inc. 220,500
-----------------------------------------------------------------------------------
5,000 Duke Power Co. 208,750
-----------------------------------------------------------------------------------
4,700 Empresa Nacional, ADR 226,775
-----------------------------------------------------------------------------------
7,000 Enron Corp. 255,500
-----------------------------------------------------------------------------------
7,000 Enron Global Power & Pipelines L.L.C. 173,250
-----------------------------------------------------------------------------------
8,000 Equitable Resources, Inc. 239,000
-----------------------------------------------------------------------------------
5,000 FPL Group, Inc. 196,250
-----------------------------------------------------------------------------------
5,000 GTE Corp. 166,875
-----------------------------------------------------------------------------------
7,000 Hong Kong Telecommunications Ltd., ADR 149,625
-----------------------------------------------------------------------------------
9,000 Pacific Enterprises 227,250
-----------------------------------------------------------------------------------
5,000 Pacific Telesis Group 133,750
-----------------------------------------------------------------------------------
10,000 PacifiCorp 197,500
-----------------------------------------------------------------------------------
10,000 Pinnacle West Capital Corp. 230,000
-----------------------------------------------------------------------------------
11,000 National Power Co. PLC, ADR 140,250
-----------------------------------------------------------------------------------
25 Nippon Telegraph & Telephone Corp. 206,795
-----------------------------------------------------------------------------------
6,000 NIPSCO Industries, Inc. 207,000
-----------------------------------------------------------------------------------
9,000 Sonat, Inc. 295,875
-----------------------------------------------------------------------------------
</TABLE>
World Utility Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
COMMON STOCKS--CONTINUED
- --------------------------------------------------------------------------------------------------
UTILITY--CONTINUED
-----------------------------------------------------------------------------------
8,000 Southern Co. $ 177,000
-----------------------------------------------------------------------------------
20,000 Southern Electric PLC 208,353
-----------------------------------------------------------------------------------
12,000 Southern Water PLC 121,772
-----------------------------------------------------------------------------------
90,000 Stet Societa Finanziaria Telefonica 259,062
-----------------------------------------------------------------------------------
8,500 Telecomunicacoes Brasileras, ADR 302,881
-----------------------------------------------------------------------------------
5,000 Telefonica de Espana, ADR 200,000
-----------------------------------------------------------------------------------
50,000 Tenaga Nasional Berhad 206,939
-----------------------------------------------------------------------------------
7,000 Tokyo Electric Power 221,684
-----------------------------------------------------------------------------------
8,000 Utilicorp United, Inc. 228,000
-----------------------------------------------------------------------------------
600 Veba AG 228,104
-----------------------------------------------------------------------------------
15,000 Westcoast Energy, Inc. 226,875
-----------------------------------------------------------------------------------
12,000 Welsh Water PLC 122,344
----------------------------------------------------------------------------------- -------------
Total 7,885,866
----------------------------------------------------------------------------------- -------------
NON-UTILITY--9.2%
-----------------------------------------------------------------------------------
3,000 American Home Products Corp. 220,875
-----------------------------------------------------------------------------------
10,000 Hanson PLC, ADR 190,000
-----------------------------------------------------------------------------------
7,000 Meditrust, REIT 223,125
-----------------------------------------------------------------------------------
20,000 National Australia Bank Ltd., Melbourne 170,366
-----------------------------------------------------------------------------------
2,000 Royal Dutch Petroleum Co., ADR 253,500
----------------------------------------------------------------------------------- -------------
Total 1,057,866
----------------------------------------------------------------------------------- -------------
TOTAL COMMON STOCKS (IDENTIFIED COST $8,393,609) 8,943,732
----------------------------------------------------------------------------------- -------------
</TABLE>
World Utility Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SHARES VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
CONVERTIBLE SECURITIES--20.3%
- --------------------------------------------------------------------------------------------------
UTILITY--5.4%
-----------------------------------------------------------------------------------
4,900 (a)Cointel/Telefonia De Argentina SA, PRIDES, $5.04 $ 274,400
-----------------------------------------------------------------------------------
$ 250,000 (a)Telekom Malaysia Berhad, Conv. Bond, 4.00%, 10/3/2004 233,750
-----------------------------------------------------------------------------------
4,000 Nacional Financiera, SNC, TMX, PRIDES, $6.79 116,000
----------------------------------------------------------------------------------- -------------
Total 624,150
----------------------------------------------------------------------------------- -------------
NON-UTILITY--14.9%
-----------------------------------------------------------------------------------
3,000 Allstate Corp., Conv. Pfd., $2.30 116,625
-----------------------------------------------------------------------------------
20,000,000 Bank of Tokyo, Cayman Finance, Conv. Bond, 4.25%, 3/31/2049 271,787
-----------------------------------------------------------------------------------
1,900 (a)Freeport McMoRan, Inc., Conv. Pfd., $4.38 96,188
-----------------------------------------------------------------------------------
15,000 Kaufman and Broad Homes, Inc., Conv. Pfd., Series B, $1.52 230,625
-----------------------------------------------------------------------------------
100,000 Pennzoil Co., Conv. Deb., 6.50%, 1/15/2003 120,890
-----------------------------------------------------------------------------------
25,000 RJR Nabisco Holdings Corp., Conv. Pfd., Series C, $0.60 153,125
-----------------------------------------------------------------------------------
5,000 Reynolds Metals Co., PRIDES, $3.30 233,750
-----------------------------------------------------------------------------------
500,000 Roche Holdings, Inc., Conv. LYON, 7.00% accrual, 4/20/2010 191,250
-----------------------------------------------------------------------------------
20,000 (a)Westinghouse Electric Corp., PEPS, Series C, $1.30 297,500
----------------------------------------------------------------------------------- -------------
Total 1,711,740
----------------------------------------------------------------------------------- -------------
TOTAL CONVERTIBLE SECURITIES (IDENTIFIED COST $2,291,991) 2,335,890
----------------------------------------------------------------------------------- -------------
</TABLE>
World Utility Fund
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
- ------------- ----------------------------------------------------------------------------------- -------------
*REPURCHASE AGREEMENT--1.7%
- --------------------------------------------------------------------------------------------------
$ 195,000 J.P. Morgan Securities, Inc., 6.17%, dated 5/31/1995,
due 6/1/1995 (AT AMORTIZED COST) $ 195,000
----------------------------------------------------------------------------------- -------------
TOTAL INVESTMENTS (IDENTIFIED COST $10,880,600)(B) $ 11,474,622
----------------------------------------------------------------------------------- -------------
</TABLE>
The following abbreviations are used in this portfolio:
ADR--American Depository Receipts
LYON--Liquid Yield Option Note
PEPS--Participating Equity Preferred Stock
PLC--Public Limited Company
PRIDES--Preferred Redeemable Increased Dividend Equity Securities
REIT--Real Estate Investment Trust
(a) Restricted securities--Investments in securities not registered under the
Securities Act of 1933. At the end of the period, these securities amounted
to $901,838 which represents 7.8% of net assets.
(b) The cost of investments for federal tax purposes amounts to $10,880,600. The
net unrealized appreciation of investments on a federal tax cost basis
amounts to $594,022, which is comprised of $594,022 appreciation at May 31,
1995.
* The repurchase agreement is fully collateralized by U.S. government and/or
agency obligations. The investment in the repurchase agreement is through
participation in a joint account with other Federated funds.
Note: The categories of investments are shown as a percentage of net assets
($11,527,753) at May 31, 1995.
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Statement of Assets and Liabilities
- --------------------------------------------------------------------------------
May 31, 1995 (unaudited)
<TABLE>
<S> <C> <C>
ASSETS:
- -----------------------------------------------------------------------------------------------------
Investments in securities, at value (identified and tax cost; $10,880,600) $ 11,474,622
- -----------------------------------------------------------------------------------------------------
Cash 3,171
- -----------------------------------------------------------------------------------------------------
Income receivable 56,640
- -----------------------------------------------------------------------------------------------------
Receivable for capital stock sold 30,524
- -----------------------------------------------------------------------------------------------------
Deferred expenses 28,128
- ----------------------------------------------------------------------------------------------------- ------------
Total assets 11,593,085
- -----------------------------------------------------------------------------------------------------
LIABILITIES:
- -----------------------------------------------------------------------------------------------------
Payable for capital stock redeemed $ 47,356
- ------------------------------------------------------------------------------------------
Tax withholding liability 2,006
- ------------------------------------------------------------------------------------------
Accrued expenses 15,970
- ------------------------------------------------------------------------------------------ ---------
Total liabilities 65,332
- ----------------------------------------------------------------------------------------------------- ------------
NET ASSETS for 1,115,795 shares of capital stock outstanding $ 11,527,753
- ----------------------------------------------------------------------------------------------------- ------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------
Paid-in capital $ 11,148,830
- -----------------------------------------------------------------------------------------------------
Net unrealized appreciation (depreciation) of investments and translation of assets and
liabilities in foreign currency 594,163
- -----------------------------------------------------------------------------------------------------
Accumulated net realized gain (loss) on investment and foreign currency transactions (303,405)
- -----------------------------------------------------------------------------------------------------
Undistributed net investment income 88,165
- ----------------------------------------------------------------------------------------------------- ------------
Total Net Assets $ 11,527,753
- ----------------------------------------------------------------------------------------------------- ------------
NET ASSET VALUE PER SHARE:
- -----------------------------------------------------------------------------------------------------
Class A Shares (net assets of $6,054,526 / 585,612 shares of capital stock outstanding) $10.34
- ----------------------------------------------------------------------------------------------------- ------------
Fortress Shares (net assets of $5,473,227 / 530,183 shares of capital stock outstanding) $10.32
- ----------------------------------------------------------------------------------------------------- ------------
OFFERING PRICE PER SHARE:*
- -----------------------------------------------------------------------------------------------------
Class A Shares (100/94.5 of $10.34) $10.94
- ----------------------------------------------------------------------------------------------------- ------------
Fortress Shares (100/99 of $10.32) $10.42
- ----------------------------------------------------------------------------------------------------- ------------
REDEMPTION PROCEEDS PER SHARE:**
- -----------------------------------------------------------------------------------------------------
Class A Shares $10.34
- ----------------------------------------------------------------------------------------------------- ------------
Fortress Shares (99/100 of $10.32) $10.22
- ----------------------------------------------------------------------------------------------------- ------------
</TABLE>
*See "What Shares Cost" in the prospectus.
**See "Contingent Deferred Sales Charge" in the prospectus.
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Statement of Operations
- --------------------------------------------------------------------------------
Six Months Ended May 31, 1995 (unaudited)
<TABLE>
<S> <C> <C> <C>
INVESTMENT INCOME:
- -----------------------------------------------------------------------------------------------------
Dividend income (net of foreign taxes withheld of $7,843) $ 227,959
- -----------------------------------------------------------------------------------------------------
Interest 21,948
- ----------------------------------------------------------------------------------------------------- ----------
Total investment income 249,907
- -----------------------------------------------------------------------------------------------------
EXPENSES:
- -----------------------------------------------------------------------------------------------------
Investment advisory fee $ 52,501
- ------------------------------------------------------------------------------------------
Administrative personnel and services fees 77,288
- ------------------------------------------------------------------------------------------
Custodian and portfolio accounting fees 15,426
- ------------------------------------------------------------------------------------------
Transfer agent and dividend disbursing agent fees and expenses 17,618
- ------------------------------------------------------------------------------------------
Directors'/Trustees' fees 1,250
- ------------------------------------------------------------------------------------------
Auditing fees 5,000
- ------------------------------------------------------------------------------------------
Distribution services fee 6,309
- ------------------------------------------------------------------------------------------
Shareholder services fee--Class A Shares 6,815
- ------------------------------------------------------------------------------------------
Shareholder services fee--Fortress Shares 6,309
- ------------------------------------------------------------------------------------------
Share registration costs 19,506
- ------------------------------------------------------------------------------------------
Legal fees 6,282
- ------------------------------------------------------------------------------------------
Printing and postage 16,016
- ------------------------------------------------------------------------------------------
Insurance premiums 2,552
- ------------------------------------------------------------------------------------------
Taxes 2,000
- ------------------------------------------------------------------------------------------
Miscellaneous 8,366
- ------------------------------------------------------------------------------------------ ---------
Total expenses 243,238
- ------------------------------------------------------------------------------------------
Deduct--
- ------------------------------------------------------------------------------------------
Waiver of investment advisory fee $ 52,501
- -------------------------------------------------------------------------------
Reimbursement of other operating expenses 171,303 223,804
- ------------------------------------------------------------------------------- --------- ---------
Net expenses 19,434
- ----------------------------------------------------------------------------------------------------- ----------
Net investment income 230,473
- ----------------------------------------------------------------------------------------------------- ----------
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY:
- -----------------------------------------------------------------------------------------------------
Net realized gain (loss) on investment and foreign currency transactions (identified cost basis) (261,140)
- -----------------------------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments and translation of assets and
liabilities in foreign currency 985,792
- ----------------------------------------------------------------------------------------------------- ----------
Net realized and unrealized gain (loss) on investments and foreign currency 724,652
- ----------------------------------------------------------------------------------------------------- ----------
Change in net assets resulting from operations $ 955,125
- ----------------------------------------------------------------------------------------------------- ----------
</TABLE>
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
MAY 31, ENDED
1995 NOVEMBER 30,
(UNAUDITED) 1994*
<S> <C> <C>
INCREASE (DECREASE) IN NET ASSETS:
- -------------------------------------------------------------------------------
OPERATIONS--
- -------------------------------------------------------------------------------
Net investment income $ 230,473 $ 175,680
- -------------------------------------------------------------------------------
Net realized gain (loss) on investment and foreign currency transactions
($261,140 and $42,265 net loss, respectively, as computed for federal tax
purposes) (261,140) (46,782)
- -------------------------------------------------------------------------------
Net change in unrealized appreciation (depreciation) on investments and
translation of assets and liabilities in foreign currency 985,792 (391,629)
- ------------------------------------------------------------------------------- -------------- -----------------
Change in net assets resulting from operations 955,125 (262,731)
- ------------------------------------------------------------------------------- -------------- -----------------
DISTRIBUTIONS TO SHAREHOLDERS--
- -------------------------------------------------------------------------------
Distributions to shareholders from net investment income
- -------------------------------------------------------------------------------
Class A Shares (108,605) (54,743)
- -------------------------------------------------------------------------------
Fortress Shares (96,197) (53,926)
- ------------------------------------------------------------------------------- -------------- -----------------
Change in net assets resulting from distributions to shareholders (204,802) (108,669)
- ------------------------------------------------------------------------------- -------------- -----------------
SHARE TRANSACTIONS--
- -------------------------------------------------------------------------------
Proceeds from sale of shares 1,544,196 11,113,812
- -------------------------------------------------------------------------------
Net asset value of shares issued to shareholders in payment of dividends
declared 115,924 57,563
- -------------------------------------------------------------------------------
Cost of shares redeemed (652,099) (1,130,566)
- ------------------------------------------------------------------------------- -------------- -----------------
Change in net assets resulting from Share transactions 1,008,021 10,040,809
- ------------------------------------------------------------------------------- -------------- -----------------
Change in net assets 1,758,344 9,669,409
- -------------------------------------------------------------------------------
NET ASSETS:
- -------------------------------------------------------------------------------
Beginning of period 9,769,409 100,000
- ------------------------------------------------------------------------------- -------------- -----------------
End of period (including undistributed net investment income of $88,165 and
$62,494, respectively) $ 11,527,753 $ 9,769,409
- ------------------------------------------------------------------------------- -------------- -----------------
</TABLE>
*For the period from March 17, 1994 (start of business) to November 30, 1994.
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Financial Highlights--Class A Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
MAY 31, ENDED
1995 NOVEMBER 30,
(UNAUDITED) 1994(B)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.67 $ 10.06
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------
Net investment income 0.21 0.24
- -------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
and foreign currency transactions 0.66 (0.46)
- ------------------------------------------------------------------------------- ------- -------
Total from investment operations 0.87 (0.22)
- -------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------
Distributions to shareholders from net investment income (0.20) (0.17)
- ------------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.34 $ 9.67
- ------------------------------------------------------------------------------- ------- -------
TOTAL RETURN (A) 9.18% (3.00%)
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------
Expenses 0.25%(d) 0.25%(c)(d)
- -------------------------------------------------------------------------------
Net investment income 4.53%(d) 5.10%(c)(d)
- -------------------------------------------------------------------------------
Expense waiver/reimbursement 4.26%(d (e) 4.43%(c)(d)
- -------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $6,055 $4,948
- -------------------------------------------------------------------------------
Portfolio turnover rate 21 % 7 %
- -------------------------------------------------------------------------------
</TABLE>
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(b) Reflects operations for the period from April 21, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, March 17, 1994, to April 20, 1994, Class A Shares had no public
investment.
(c) The Adviser waived all of its investment advisory fee, 1.00%, and
reimbursed other operating expenses, 0.86%, to comply with certain state
expense limitations. The remainder of the reimbursement was voluntary. This
expense decrease is reflected in both the expense and net investment income
ratios shown above.
(d) Computed on an annualized basis.
(e) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Financial Highlights--Fortress Shares
- --------------------------------------------------------------------------------
(For a share outstanding throughout each period)
<TABLE>
<CAPTION>
SIX MONTHS
ENDED PERIOD
MAY 31, ENDED
1995 NOVEMBER 30,
(UNAUDITED) 1994(B)
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.66 $ 10.04
- -------------------------------------------------------------------------------
INCOME FROM INVESTMENT OPERATIONS
- -------------------------------------------------------------------------------
Net investment income 0.20 0.21
- -------------------------------------------------------------------------------
Net realized and unrealized gain (loss) on investment
and foreign currency transactions 0.65 (0.43)
- ------------------------------------------------------------------------------- ------- -------
Total from investment operations 0.85 (0.22)
- -------------------------------------------------------------------------------
LESS DISTRIBUTIONS
- -------------------------------------------------------------------------------
Distributions to shareholders from net investment income (0.19) (0.16)
- ------------------------------------------------------------------------------- ------- -------
NET ASSET VALUE, END OF PERIOD $ 10.32 $ 9.66
- ------------------------------------------------------------------------------- ------- -------
TOTAL RETURN (A) 8.95% (3.07%)
- -------------------------------------------------------------------------------
RATIOS TO AVERAGE NET ASSETS
- -------------------------------------------------------------------------------
Expenses 0.50%(d) 0.50%(c)(d)
- -------------------------------------------------------------------------------
Net investment income 4.27%(d) 4.59%(c)(d)
- -------------------------------------------------------------------------------
Expense waiver/reimbursement 4.26%(d (e) 4.43%(c)(d)
- -------------------------------------------------------------------------------
SUPPLEMENTAL DATA
- -------------------------------------------------------------------------------
Net assets, end of period (000 omitted) $5,473 $4,821
- -------------------------------------------------------------------------------
Portfolio turnover rate 21 % 7 %
- -------------------------------------------------------------------------------
</TABLE>
(a) Based on net asset value, which does not reflect the sales load or
contingent deferred sales charge, if applicable.
(b) Reflects operations for the period from April 21, 1994 (date of initial
public investment) to November 30, 1994. For the period from the start of
business, March 28, 1994, to April 20, 1994, Fortress Shares had no public
investment.
(c) The Adviser waived all of its investment advisory fee, 1.00%, and
reimbursed other operating expenses, 0.86%, to comply with certain state
expense limitations. The remainder of the reimbursement was voluntary. This
expense decrease is reflected in both the expense and net investment income
ratios shown above.
(d) Computed on an annualized basis.
(e) This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.
(See Notes which are an integral part of the Financial Statements)
World Utility Fund
Notes to Financial Statements
- --------------------------------------------------------------------------------
May 31, 1995 (unaudited)
(1) ORGANIZATION
World Investment Series, Inc. (the "Corporation") is registered under the
Investment Company Act of 1940, as amended (the "Act"), as an open-end
management investment company. The Corporation consists of one diversified
portfolio, World Utility Fund (the "Fund").
The Fund offers two classes of shares: Class A Shares and Fortress Shares.
(2) SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.
A. INVESTMENT VALUATIONS--Listed equity securities and fixed income securities
are valued at the last sale price reported on national securities
exchanges. Listed corporate bonds, unlisted securities, and short-term
securities are generally valued at the price provided by an independent
pricing service. Short-term securities with remaining maturities of sixty
days or less at the time of purchase may be valued at amortized cost, which
approximates market value.
B. REPURCHASE AGREEMENTS--It is the policy of the Fund to require a custodian
bank to take possession, to have legally segregated in the Federal Reserve
Book Entry System, or to have segregated within the custodian bank's vault,
all securities held as collateral under repurchase agreement transactions.
Additionally, procedures have been established by the Fund to monitor, on a
daily basis, the market value of each repurchase agreement's collateral to
ensure that the value of collateral at least equals the repurchase price to
be paid under the repurchase agreement transaction.
The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed
by the Fund's adviser to be creditworthy pursuant to guidelines and/or
standards reviewed or established by the Board of Directors (the
"Directors").
C. INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS--Dividend income and
distributions to shareholders are recorded on the ex-dividend date.
Interest income and expenses are accrued daily. Bond premium and discount,
if applicable, are amortized as required by the Internal Revenue Code, as
amended (the "Code").
D. FOREIGN CURRENCY--The accounting records of the Fund are maintained in U.S.
dollars. All assets and liabilities denominated in foreign currencies
("FC") are translated into U.S. dollars based on the rate of exchange of
such currencies against U.S. dollars on the date of valuation. Purchases
and sales of securities, income and expenses are translated at the rate of
exchange quoted on the respective date that such transactions are recorded.
Differences between income and expense amounts recorded and collected or
paid are adjusted when reported by the custodian bank. The Fund does not
isolate that portion of the results of
World Utility Fund
- --------------------------------------------------------------------------------
operations resulting from changes in foreign exchange rates on investments
from the fluctuations arising from changes in market prices of securities
held. Such fluctuations are included with the net realized and unrealized
gain or loss from investments.
Reported net realized foreign exchange gains or losses arise from sales and
maturities of short-term securities, sales of FCs, currency gains or losses
realized between the trade and settlement dates on securities transactions,
the difference between the amounts of dividends, interest, and foreign
withholding taxes recorded on the Fund's books, and the U.S. dollar
equivalent of the amounts actually received or paid. Net unrealized foreign
exchange gains and losses arise from changes in the value of assets and
liabilities other than investments in securities at fiscal year end,
resulting from changes in the exchange rate.
E. FEDERAL TAXES--It is the Fund's policy to comply with the provisions of the
Code applicable to regulated investment companies and to distribute to
shareholders each year substantially all of its income. Accordingly, no
provisions for federal tax are necessary. However, federal taxes may be
imposed on the Fund upon the disposition of certain investments in passive
foreign investment companies. Withholding taxes on foreign dividends have
been provided for in accordance with the Fund's understanding of the
applicable country's tax rules and rates. At November 30, 1994, the Funds,
for federal tax purposes, had a capital loss carryforward of $42,265, which
will reduce the Funds taxable income arising from future net realized gain
on investments, if any, to the extent permitted by the Code, and thus will
reduce the amount of the distributions to shareholders which would
otherwise be necessary to relieve the Fund of any liability for federal
tax. Pursuant to the Code, such capital loss carryforward will expire in
2002.
F. WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS--The Fund may engage in
when-issued or delayed delivery transactions. The Fund records when-issued
securities on the trade date and maintains security positions such that
sufficient liquid assets will be available to make payment for the
securities purchased. Securities purchased on a when-issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date.
G. CONCENTRATION OF CREDIT RISK--The Fund invests in equity and fixed income
securities of non-U.S. issuers. Although the Fund maintains a diversified
investment portfolio, the political or economic developments within a
particular country or region may have an adverse effect on the ability of
domiciled issuers to meet their obligations. Additionally, political or
economic developments may have an effect on the liquidity and volatility of
portfolio securities and currency holdings.
World Utility Fund
- --------------------------------------------------------------------------------
At May 31, 1995, the portfolio was diversified with the following
countries:
<TABLE>
<S> <C>
Argentina 5.0%
Australia 3.4%
Brazil 2.6%
Bolivia 2.0%
Canada 2.0%
Germany 2.0%
Hong Kong 3.6%
Italy 2.3%
Japan 6.1%
Malaysia 3.8%
Mexico 1.0%
Netherlands 2.2%
Spain 3.7%
Switzerland 1.6%
United Kingdom 8.1%
United States 50.6%
</TABLE>
H. RESTRICTED SECURITIES--Restricted securities are securities that may only
be resold upon registration under federal securities laws or in
transactions exempt from such registration. In some cases, the issuer of
restricted securities has agreed to register such securities for resale, at
the issuer's expense either upon demand by the Fund or in connection with
another registered offering of the securities. Many restricted securities
may be resold in the secondary market in transactions exempt from
registration. Such restricted securities may be determined to be liquid
under criteria established by the Directors. The Fund will not incur any
registration costs upon such resales. The Fund's restricted securities are
valued at the price provided by dealers in the secondary market or, if no
market prices are available, at the fair value as determined by the Fund's
pricing committee. Additional information on each restricted security held
at May 31, 1995 is as follows:
<TABLE>
<CAPTION>
ACQUISITION ACQUISITION
SECURITY DATE COST
<S> <C> <C>
Cointel/Telefonica De Argentina SA, PRIDES 4/15/94-9/15/94 $ 203,575
Freeport McMoRan, Inc., Conv. Bond 11/15/94 144,000
Telekom Malaysia Berhad, Conv. Bond 9/22/94 200,000
Westinghouse Electric Corp., PEPS Series C 4/15/94-9/28/94 205,750
</TABLE>
I. DEFERRED EXPENSES--The costs incurred by the Fund with respect to
registration of its shares in its first fiscal year, excluding the initial
expense of registering its shares, have been deferred and are being
amortized using the straight-line method not to exceed a period of five
years from the Fund's commencement date.
J. RECLASSIFICATION--Income distribution and capital gain distributions are
determined in accordance with income tax regulations which may differ from
generally accepted accounting principles. These differences are primarily
due to differing treatments for foreign currency transactions. Amounts as
of November 30, 1994, have been reclassified to reflect a decrease in
undistributed net investment income of $4,517, and an increase in
accumulated net realized gain/loss, of $4,517. Net investment income, net
realized gains, and net assets were not affected by this change.
K. OTHER--Investment transactions are accounted for on the trade date.
World Utility Fund
- --------------------------------------------------------------------------------
(3) CAPITAL STOCK
At May 31, 1995, there were 1,000,000,000 shares of $0.001 par value capital
stock authorized for Class A Shares and Fortress Shares, respectively.
Transactions in capital stock were as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
MAY 31, 1995 NOVEMBER 30, 1994*
CLASS A SHARES SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
- -------------------------------------------------------------- --------- ------------ --------- -------------
Shares sold 105,174 $ 1,018,113 603,819 $ 6,052,720
- --------------------------------------------------------------
Shares issued to shareholders in payment of dividends declared 8,199 78,253 4,034 40,152
- --------------------------------------------------------------
Shares redeemed (39,267) (389,753) (106,347) (1,072,939)
- -------------------------------------------------------------- --------- ------------ --------- -------------
Net change resulting from Class A Shares transactions 74,106 $ 706,613 501,506 $ 5,019,933
- -------------------------------------------------------------- --------- ------------ --------- -------------
</TABLE>
<TABLE>
<CAPTION>
SIX MONTHS ENDED PERIOD ENDED
MAY 31, 1995 NOVEMBER 30, 1994**
FORTRESS SHARES SHARES DOLLARS SHARES DOLLARS
<S> <C> <C> <C> <C>
- ------------------------------------------------------------- --------- ------------ ---------- -------------
Shares sold 54,589 $ 526,083 503,245 $ 5,061,092
- -------------------------------------------------------------
Shares issued to shareholders in payment of dividends
declared 3,951 37,671 1,751 17,411
- -------------------------------------------------------------
Shares redeemed (27,498) (262,346) (5,855) (57,627)
- ------------------------------------------------------------- --------- ------------ ---------- -------------
Net change resulting from Fortress Shares transactions 31,042 $ 301,408 499,141 $ 5,020,876
- ------------------------------------------------------------- --------- ------------ ---------- -------------
Net change resulting from capital stock
transactions 105,148 $ 1,008,021 1,000,647 $ 10,040,809
- ------------------------------------------------------------- --------- ------------ ---------- -------------
</TABLE>
* For the period from March 17, 1994 (start of business) to November 30, 1994.
** For the period from March 28, 1994 (start of business) to November 30, 1994.
(4) INVESTMENT ADVISORY FEE AND OTHER TRANSACTIONS WITH AFFILIATES
INVESTMENT ADVISORY FEE--Federated Management, the Fund's investment adviser
(the "Adviser") receives for its services an annual investment advisory fee
equal to 1.00% of the Fund's average daily net assets. The Adviser may
voluntarily choose to waive its fee and reimburse certain operating expenses of
the Fund. The Adviser can modify or terminate this voluntary waiver and
reimbursement at any time at its sole discretion.
World Utility Fund
- --------------------------------------------------------------------------------
ADMINISTRATIVE FEE--Federated Administrative Services ("FAS"), under the
Administrative Services Agreement, provides the Fund with administrative
personnel and services. The FAS fee is based on the level of average aggregate
daily net assets of all funds advised by subsidiaries of Federated Investors for
the period. The administrative fee received during the period of the
Administrative Services Agreement shall be at least $125,000 per portfolio and
$30,000 per each additional class of shares.
DISTRIBUTION AND SHAREHOLDER SERVICES FEE--The Fund has adopted a Distribution
Plan (the "Plan") pursuant to Rule 12b-1 under the Act. Under the terms of the
Plan, the Fund will compensate Federated Securities Corp. ("FSC"), the principal
distributor, from the net assets of the Fund to finance activities intended to
result in the sale of the Fund's Fortress Shares. The Plan provides that the
Fund may incur distribution expenses up to 0.25 of 1% of the average daily net
assets of the Fortress Shares, annually, to compensate FSC.
Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services ("FSS"), the Fund will pay FSS up to .25 of 1% of average daily net
assets of the fund for the period. This fee is to obtain certain services for
shareholders and the maintenance of shareholder accounts.
TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES--Federated Services
Company ("FServ") serves as transfer and dividend disbursing agent for the Fund.
The fee is based on the size, type and number of accounts and transactions made
by shareholders.
ORGANIZATIONAL EXPENSES--Organizational expenses and start-up administrative
service expenses incurred by the Fund will be borne initially by the
Administrator. The Fund has agreed to reimburse the Administrator for the
organizational expenses and start-up administrative expenses during the five
year period following April 12, 1994 (the date the Fund first became effective).
For the six months ended May 31, 1995, the Fund paid $0 and $0, respectively,
pursuant to this agreement.
SUBSEQUENT EVENT--Effective July 26, 1995 the Fund will offer two additional
classes of shares; Class B Shares and Class C Shares.
Certain of the Officers and Directors of the Fund are Officers and Directors or
Trustees of the above companies.
(5) INVESTMENT TRANSACTIONS
Purchases and sales of investments, excluding short-term securities and in kind
contributions, for the six months ended May 31, 1995 were as follows:
<TABLE>
<S> <C>
- ----------------------------------------------------------------------------------------------------
PURCHASES $ 3,566,652
- ---------------------------------------------------------------------------------------------------- ------------
SALES $ 2,144,140
- ---------------------------------------------------------------------------------------------------- ------------
</TABLE>
Directors Officers
- --------------------------------------------------------------------------------
John F. Donahue John F. Donahue
Thomas G. Bigley Chairman
John T. Conroy, Jr. Richard B. Fisher
William J. Copeland President
James E. Dowd J. Christopher Donahue
Lawrence D. Ellis, M.D. Vice President
Richard B. Fisher Edward C. Gonzales
Edward L. Flaherty, Jr. Vice President and Treasurer
Peter E. Madden John W. McGonigle
Gregor F. Meyer Vice President and Secretary
John E. Murray, Jr. David M. Taylor
Wesley W. Posvar Assistant Treasurer
Marjorie P. Smuts Byron F. Bowman
Assistant Secretary
Mutual funds are not bank deposits or obligations, are not guaranteed
by any bank, and are not insured or guaranteed by the FDIC, the Federal
Reserve Board, or any other governmental agency. Investment in mutual funds
involves risk, including possible loss of principal.
This report is authorized for distribution to prospective investors only when
preceded or accompanied by the Fund's prospectus which contains facts
concerning its objective and policies, management fees, expenses and other
information.
[LOGO]
Federated Securities Corp.
- ------------------------------------------------------------------------------
Distributor
A Subsidiary of Federated Investors
Federated Investors Tower
Pittsburgh, PA 15222-3779
Cusip 338319700
Cusip 338319809
Cusip 338319882
G00324-01 (7/95)
